Experts warn against cutting remote workers’ pay

After a law firm revealed it would reduce salaries for employees who opted to work from home full time, People Management looks at the risks of employing such a policy

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A company’s decision to offer staff the option to work fully remotely at the cost of a pay cut has been criticised by experts.

Law firm Stephenson Harwood told employees they could work from home permanently, but that if they did so their wage would be deducted by 20 per cent. The policy was extended to all staff, including lawyers, below partner level.

“We have a hybrid working policy which we believe strikes the right balance, with our people having the option to work remotely for up to two days a week and salaries remain the same,” a spokesperson for the firm told People Management.

“We made a ‘work from anywhere’ model successful after Covid”

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The spokesperson added that the firm recruited outside London during the pandemic and, as a result, offered different packages to those compared to employees who regularly work from the office in London. The new policy opens full remote working to everyone.

However, it has been reported that only a small number of staff opted to work fully remotely, and none are trainee or junior lawyers, with experts saying this is no surprise.

“It is hard to see how taking money away solves any of the issues an employer thinks they might have with people working from home – especially when they are saving money on office space,” said Martin Williams, head of employment at Mayo Wynne Baxter.

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Williams said that having inflexible blanket policies on working from home is “not a sensible approach”, and employers needed to manage employee expectations and consult with staff on a case-by-case basis.

Gemma Dale, lecturer at Liverpool John Moores University, agreed that reducing pay for those working from home permanently was “misguided”. “People should be paid for what they do, not where they live,” she said.

“I am concerned that underlying this particular action is the myth that those who work remotely are somehow less productive, committed and hard working, and this should be reflected in their pay,” said Dale. 

She added that working from home was not cost neutral as employees may well find themselves paying additional utility costs, while employers could often save money longer term with fewer employees in the office. 

“There is a big difference between recruiting further afield and paying a commensurate salary based on geography, but framing this as a pay cut to existing staff may backfire,” she explained, warning that employees wanting more flexibility could end up looking elsewhere.

Donald MacKinnon, group legal director at WorkNest, also warned such a policy could leave employers vulnerable to leagal claims including claims of discrimination.

“If home working is being used by a woman because they have caring responsibilities or by a disabled person, then arguably paying them a lower wage for working from home may be indirectly discriminatory,” he said. An employer would need to be able to justify that the reduction in pay was a legitimate and proportionate measure, for example by showing that an employee saved 20 per cent of their wage by working from home.

“It could also raise equal pay issues if the same work is being carried out by a female home worker compared to a male office worker,” he warned, adding that the situation could raise questions around whether the two roles are comparable.